Those who delayed taking their pensions this year will gain an extra £10,000 over
a 25-year retirement

Savers who made the tactical decision to delay taking their pensions this year will be rewarded with an extra £136m in old age, calculations by The Telegraph indicate.

In January we forecast that the payouts available on turning a pension into income would recover, having plunged to record lows in the aftermath of the financial crisis.

On the basis of our reports – or other advice to the same effect – as many as 60,000 people avoided cashing in their retirement nest eggs for a fixed income, industry sales figures suggest. Many chose to keep working or dip into emergency savings instead. Others simply took the 25pc tax-free lump sum from their pension and left the remainder invested in the stock market.

Their patience has been rewarded: a £100,000 pension pot, which would have bought an annuity of £4,902 a year on January 1, now buys £5,312. This 9pc increase is worth £10,000 over a 25-year retirement. Crucially, someone buying an annuity at 66 rather than 65 already gets a higher rate due to the expectation that he or she will claim an income for one year less.

In addition, analysts said rates were likely to jump by another 5pc next year as the economy perked up.

Billy Burrows of Annuity Line, a brokerage, said: “My forecast for 2014 is that annuity rates will continue to nudge up and it seems sensible to suggest that next year rates will increase by about half of this year’s rises, based on the investment markets.”

Paul Taylor of McCarthy Taylor, the financial adviser, said anyone who could afford to wait should avoid buying an annuity – perhaps for several years.

He said: “Rates are still dire and almost certain to improve – it’s just a question of when. So those able to delay are making a sensible decision.”

Using averages, the boost to annuity rates would generate £136m extra annual income if the 60,000 who delayed bought today. This is in addition to a higher payout, accounting for the loss of one year’s income. Only a fraction will have profited from near-20pc growth in global share prices, as investments are typically moved to bonds or cash as retirement nears.

While some benefited, not everyone had the luxury of waiting for rates to improve. An estimated 180,000 were forced to lock into an annuity before the recovery began in June. They will be £135 a year worse off on average for the rest of their lives, as annuity purchases are irreversible.

Alan Higham of Annuity Direct, another brokerage, suggested that savers wait until they were aged 70 to 75 to buy an annuity. He said: “You can’t get too cute on this, there’s always a risk that delaying won’t pay off, but I strongly believe that within five years rates will get a sizeable kick.”

You can take an income in the meantime by entering “drawdown”, where your money remains invested. The danger is that your fund size could fall drastically during stock market turbulence, especially if you withdraw during the dips.

Typically you need upwards of £50,000 to consider this route. It is worth paying a financial adviser to help craft a well-protected investment portfolio. Alternatively, the entire pot could be placed into a bank-style cash account. However, returns are likely to be too small to cover your income needs until interest rates improve.

Another option is to take the 25pc tax-free cash from your pension and leave the rest sitting untouched until you need a steady stream of income. This could allow time for rates to improve.

Annuity rates were depressed by a Bank of England policy to flood the money system with cash, thus stimulating the economy. This “quantitative easing” crippled the returns on government bonds, which determine the rates on annuities. The downward trend for bond yields is gradually reversing as the economy recovers.